River Forest Community School Corporation. Forging Ingots Together

Transcription

1 2020 Circuit Breaker Impact FUNDING CLIFF! River Forest Community School Corporation Forging Ingots Together Presented by: Dr. Steven Disney and Umbaugh and Associates 1

2 School Fund Structure 2018 & Prior GENERAL The General Fund is the main resource for supporting the operations and programs of the school district. In 2009 General Fund no longer was supported by local tax revenue. The revenue is based on State Support (also known as the formula ). The formula is driven by the ADM of the district. Students are counted twice per year and the September reported data is what determines each school district s funding. DEBT SERVICE & EXEMPT DEBT SERVICE The Debt Service Fund provides for repayment of the corporation debt issued after July 1, The source of revenue is primarily property tax that is subject to the tax cap. The Exempt Debt Service Fund provides for repayment of the corporation debt issued prior to July 1, 2008 and is not affected by the tax cap and supported by property tax. The exemption from circuit breaker is expected to conclude at the end of CAPITAL PROJECTS The Capital Projects Fund (also known as CPF) is a property tax supported fund. Expenses associated with the fund are building repair, purchase of equipment, construction, remodeling and improvements, property insurance, technology and utilities. TRANSPORTATION OPERATING Transportation Fund provides for all operating expenses for the transportation of students, exclusively for transportation salaries and benefits of drivers, supervisors, mechanics, etc. The fund also allows for contracted transportation services, insurances, fuel and repairs. BUS REPLACEMENT The Bus Replacement Fund is utilized for purchase or lease of buses. The plan operates on a 12 year replacement plan. This fund is property tax based, and can be used to pay for a portion of the contracted transportation services. RAINY DAY Rainy Day Funds are established to reserve funds for future designated expenses. Funds can be transferred to Rainy Day if in excess by board resolution.

3 RFCSC 2019 New Fund Structure EDUCATION FUND GENERAL FUND OPERATION FUND Capital Projects Fund TRANSPORTATION OPERATING BUS REPLACEMENT RFERENDUM FUND 016-0

4 EDUCATION FUND Created from HB 1009 that was formulated effective 2019 as a legislative directive to represent all Academic Achievement and Student Support Expenses to formulate the direct classroom expenditures. OPERATION FUND Created from HB 1009 that was formulated effective 2019 as a legislative directive to represent all Overhead and Nonoperational and Operational expenditures from the former General Fund, Capital Projects Fund, Transportation Fund and Bus Replacement Fund, including salaries & benefits for offices of superintendent, business manager & human resources; custodian and maintenance salaries and benefits; insurance and utilities DEBT SERVICE & EXEMPT DEBT SERVICE The Debt Service Fund provides for repayment of the corporation debt issued after July 1, The source of revenue is primarily property tax that is subject to the tax cap. The Exempt Debt Service Fund provides for repayment of the corporation debt issued prior to July 1, 2008 and is not affected by the tax cap and supported by property tax. The exemption from circuit breaker is expected to conclude at the end of RAINY DAY FUND Rainy Day Funds are established to reserve funds for future designated expenses. Funds can be transferred to Rainy Day if in excess by board resolution. Education Fund Exempt Debt Ref Operations Rainy Day Debt

5 Education Fund: Fund General- Student Instructional in nature, direct student impact; will contain mainly salaries & benefits. Supports student achievement, and student support. RFCSC ENROLLMENT ADM E N R O L L M E N T YEARS

6 General- Operations Capital Projects Transportation Bus Replacement Operations Operations Funds: Fund Operational in nature, direct district operational costs; will contain salaries, benefits of support staff and operational costs such as transportation, utilities, repairs and maintenance. Supports the function Of operating a school district and can be referred to as overhead or non-operational budget. This fund combines revenues and expenses that were once part of the General fund, Capital Projects fund, Transportation fund, and Bus Replacement fund. MAJOR REVENUE SOURCES, STATE SUPPORT BASIC GRANT, ARE TO BE TRANSFERRED FROM THE EDUCATION FUND TO THE OPERATIONS FUND, TAX LEVIES AND TAX RATES GENERATED FROM THE TRANSPORTATION FUND, BUS REPLACEMENT FUND AND CAPITAL PROJECTS ARE RECEIPTED DIRECTLY INTO THE NEW OPERATIONS FUND THE STATE IS CONSIDERING PLACING LIMITS ON TRANSFERS DISTRICTS WILL CONTINUE TO RECEIVE THE MAX TAX RATE FOR CAPITAL PROJECTS AND THE MAX LEVIES FOR BOTH TRANSPORTATION AND BUS REPLACEMENT FUNDS.

7 River Forest Community School Corporation January 24, 2019

8 Partial List of Umbaugh Clients in and around Lake County, Indiana Crown Point Community School Corporation Griffith Community School Corporation Hanover Community School Corporation School Town of Highland School Town of Munster Duneland School Corporation Lake County Library City of Hobart Town of Dyer City of Whiting 8

9 Discussion Topics Overview of Financial Projections Overview of Operating Referendum Considerations Overview of Estimated Taxpayer Impact 9

10 Overview of Financial Projections 10

11 2018 Transportation/Capital Projects Fund Levies School District Student Enrollment (ADM) (1) Certified Transportation Levy (2) Net Transportation Levy/Per Pupil (3) Certified Capital Projects Fund Levy (2) Net CPF Levy/Per Pupil (3) River Forest 1,632 $663,117 $317 $512,660 $245 Wheeler 1,452 1,282, ,190, Hobart 4,005 1,606, ,484, Merrillville 6,389 5,164, ,412,993 1,000 (1) Student enrollment reflects the September 2017 Average Daily Membership (ADM) counts, per the Indiana Department of Education. (2) Certified levies are per the 2018 County Budget Orders. (3) Net levies per pupil reflect the circuit breaker impact on the certified levy. Circuit breaker amounts are per the Indiana Department of Local Government Finance. 11

12 Total Annual Tax Rate RIVER FOREST COMMUNITY SCHOOL CORPORATION HISTORICAL TAX RATES $ % $ $ % $ $ $ $ $ % 0.00% Annual Percentage Change $ % $ $ Non-Exempt $ $ $ $ $ $ $ $ Total Exempt $ $ $ $ $ $ $ $ Annual Percent Change 0.81% 8.30% -2.11% 13.73% 4.94% 1.40% -4.66% % 12

13 Cash Flow Assumptions Cash Flow Assumptions: State Aid Investment Income Estimated Net Assessed Value License Excise/Financial Institutions Factor Property Tax Caps Other Revenues Cash Flow Assumptions: Instruction, Support Services and Community Services Receipts (Baseline) School enrollment projections per School Officials. Assumes 0.5% annual growth for Tuition Support and Complexity Grants. Assumes 1.2% interest earnings Based upon certified assessed value, 2020 and beyond estimated annual growth ranging from 1.86% %, per Policy Analytics projections Assumes 3.62%, per 2018 Budget Order Based upon DLGF projection for per Policy Analytics projections. No assumed growth from 2017 actual for other State and local sources Disbursements (Baseline) 1.5% annual inflationary increase 2020 through 2027 (5-year average is 1.7%) 13

14 Property Tax Caps Property Classification Gross Assessed Value Capped Percentage Maximum Tax Liability Homestead $100,000 1% $1,000 Other Residential, Rental, Agricultural Land and Long- Term Care Facilities $100,000 2% $2,000 Business (Real/Personal) $100,000 3% $3,000 Notes: (1) Creates additional limits for certain taxpayers over age 65. (2) Debt service and operating levies created by voter referendum in all counties are not subject to circuit breaker tax caps. (3) Exemptions for debt approved prior to July 1, 2008, for Lake and St. Joseph Counties expires December 31,

15 Property Tax Caps Year Estimated Operations Fund Annual Certified Levy (1,2) Estimated Operations Fund Annual Circuit Breaker (1,2,3) Estimated Operations Fund Annual Net Levy (1,2,3) 2018 $1,298,518 ($283,980) $1,014, ,362,669 (266,718) 1,095, ,385,630 (787,461) 598, ,438,282 (813,732) 624, ,490,059 (832,883) 657, ,542,209 (846,532) 695, ,597,727 (859,724) 738, ,655,243 (870,630) 784, ,714,830 (882,848) 831, ,774,848 (893,679) 881,169 (1) Based upon 2018 and 2019 Lake County Budget Orders. (2) Based upon estimates provided by Policy Analytics October (3) Assumes annual Non-Exempt Debt Service Fund property tax levy of $1,181,

16 Totals (In Thousands) $16,000 River Forest Community School Corporation Actual and Projected Receipts and Disbursements: Combined General and 2015 Operating Referendum Funds Baseline ( ) $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Receipts $11,028 $11,159 $10,586 $11,427 $12,653 $12,932 $13,006 $12,425 $12,438 $12,335 $11,377 $11,268 $11,213 $11,075 $10,911 Disbursements $11,615 $10,786 $10,770 $11,419 $12,341 $12,510 $12,697 $12,888 $13,081 $13,277 $13,477 $13,679 $13,884 $14,092 $14,304 Receipts Disbursements Assumes that the current Operating Referendum tax rate of $ expires in 2022 and is not renewed in

17 Fund Balance (In Thousands) $4,000 River Forest Community School Corporation Actual and Projected December 31 Fund Balance: Combined General and 2015 Operating Referendum Funds Baseline ( ) $2,000 $0 ($2,000) ($4,000) ($6,000) ($8,000) ($10,000) ($12,000) ($14,000) ($16,000) Fund Balance, December Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected $643 $1,015 $831 $839 $1,151 $1,573 $1,882 $1,419 $775 ($167) ($2,267) ($4,677) ($7,348) ($10,365) ($13,757) Assumes that the current Operating Referendum tax rate of $ expires in 2022 and is not renewed in

18 Overview of Operating Referendum Considerations 18

19 Illustrative Operating Referendum Model A: Operating Referendum Tax Rate of $ Model B: Operating Referendum Tax Rate of $ Model C: Operating Referendum Tax Rate of $ Illustrative Tax Rate $ $ $ Illustrative Annual Growth in Net Assessed Value from Illustrative Levy Beginning in 2020 Cash Balance % - December 31, 2027 Illustrative Incremental Impact over 2015 Operating Referendum ($0.4200) 1.86% % 1.86% % 1.86% % $1,655,000 $1,822,000 $1,990,000-5% 6% 17% $ $ $ Note: Exempt Debt Service under the Eligible County Exemption for Lake County expires on December 31,

20 Totals (In Thousands) Model A $20,000 $18, Operating Referendum Tax Rate: $ $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2, Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Receipts $11,028 $11,159 $10,586 $11,427 $12,653 $12,932 $13,006 $13,412 $13,459 $13,393 $13,256 $13,199 $13,199 $13,118 $13,007 Disbursements $11,615 $10,786 $10,770 $11,419 $12,341 $12,510 $12,697 $12,888 $13,081 $13,277 $13,477 $13,679 $13,884 $14,092 $14,304 20

21 Totals (In Thousands) River Forest Community School Corporation Actual and Projected December 31 Fund Balance: Combined General and Operating Referendum Funds ( ) Model A $7, Operating Referendum Tax Rate: $ $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 ($1,000) Fund Balance, December Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected $643 $1,015 $831 $839 $1,151 $1,573 $1,882 $2,406 $2,783 $2,899 $2,678 $2,199 $1,514 $539 ($757) 21

22 Totals (In Thousands) Model B $20, Operating Referendum Tax Rate: $ $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2, Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Receipts $11,028 $11,159 $10,586 $11,427 $12,653 $12,932 $13,006 $13,585 $13,637 $13,578 $13,449 $13,400 $13,409 $13,336 $13,234 Disbursements $11,615 $10,786 $10,770 $11,419 $12,341 $12,510 $12,697 $12,888 $13,081 $13,277 $13,477 $13,679 $13,884 $14,092 $14,304 22

23 Totals (In Thousands) River Forest Community School Corporation Actual and Projected December 31 Fund Balance: Combined General and Operating Referendum Funds ( ) Model B $7, Operating Referendum Tax Rate: $ $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Fund Balance, December Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected $643 $1,015 $831 $839 $1,151 $1,573 $1,882 $2,579 $3,134 $3,435 $3,408 $3,129 $2,654 $1,898 $828 23

24 Totals (In Thousands) Model C $20,000 $18, Operating Referendum Tax Rate: $ $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2, Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Receipts $11,028 $11,159 $10,586 $11,427 $12,653 $12,932 $13,006 $13,759 $13,817 $13,763 $13,642 $13,602 $13,619 $13,554 $13,463 Disbursements $11,615 $10,786 $10,770 $11,419 $12,341 $12,510 $12,697 $12,888 $13,081 $13,277 $13,477 $13,679 $13,884 $14,092 $14,304 24

25 Totals (In Thousands) River Forest Community School Corporation Actual and Projected December 31 Fund Balance: Combined General and Operating Referendum Funds ( ) Model C $7, Operating Referendum Tax Rate: $ $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Fund Balance, December Actual Actual Actual Actual Actual Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected $643 $1,015 $831 $839 $1,151 $1,573 $1,882 $2,753 $3,488 $3,974 $4,140 $4,063 $3,798 $3,259 $2,418 25

26 Overview of Estimated Taxpayer Impact 26

27 River Forest Community School Corporation Illustrative Taxpayer Impact for Operating Referendum Models Model A: Operating Referendum Tax Rate of $ Hobart Township Gary Corp - Hobart Township Lake Station Hobart Township New Chicago Corp (Hobart) Hobart Corp Hobart Township Illustrative Incremental Impact over Current Operating Referendum Tax Rate of $0.4200: $ Effective Tax Rate (2) $ $ $ $ $ Market Value of Property Net Assessed Value Illustrative Annual Change in Tax Bill $75,500 (3) $16,825 (4) (5) $95.00 ($25.00) $12.00 $96.00 $96.00 Illustrative Monthly Change in Tax Bill $7.92 ($2.08) $1.00 $8.00 $8.00 Illustrative Annual Change in Tax Bill Non-Residential Property Rental, Agricultural, Long-term Care (5) $100,000 ($110.00) ($149.00) ($149.00) ($149.00) ($149.00) Commercial Property (5) $100,000 $ ($149.00) ($149.00) ($138.00) ($149.00) (1) Based on the 2019 Certified Net Assessed Value of $164,137,456, for the existing Operating Referendum as provided by the Department of Local Government Finance and assumes no growth. (2) The 2020 effective tax rate is calculated by increasing the 2019 certified tax rate by the incremental impact of the proposed operating referendum tax rate. (3) Median home value within the School Corporation, per the U.S. Census Bureau American Community Survey. (4) Assumes homestead deduction, 35% supplemental homestead deduction and mortgage deduction. Assumes no deduction for non-homestead properties. (5) Based on Circuit Breaker tax caps of 1% for residential properties; 2% for rental, agricultural, and long-term care properties; and 3% for commercial properties. 27

28 River Forest Community School Corporation Illustrative Taxpayer Impact for Operating Referendum Models Model B: Operating Referendum Tax Rate of $ Hobart Township Gary Corp - Hobart Township Lake Station Hobart Township New Chicago Corp (Hobart) Hobart Corp Hobart Township Illustrative Incremental Impact over Current Operating Referendum Tax Rate of $0.4200: $ Effective Tax Rate (2) $ $ $ $ $ Market Value of Property Net Assessed Value Illustrative Annual Change in Tax Bill $75,500 (3) $16,825 (4) (5) $ ($9.00) $28.00 $ $ Illustrative Monthly Change in Tax Bill $9.33 ($0.75) $2.33 $9.33 $9.42 Illustrative Annual Change in Tax Bill Non-Residential Property Rental, Agricultural, Long-term Care (5) $100,000 ($10.00) ($49.00) ($49.00) ($49.00) ($49.00) Commercial Property (5) $100,000 $ ($49.00) ($49.00) ($38.00) ($49.00) (1) Based on the 2019 Certified Net Assessed Value of $164,137,456, for the existing Operating Referendum as provided by the Department of Local Government Finance and assumes no growth. (2) The 2020 effective tax rate is calculated by increasing the 2019 certified tax rate by the incremental impact of the proposed operating referendum tax rate. (3) Median home value within the School Corporation, per the U.S. Census Bureau American Community Survey. (4) Assumes homestead deduction, 35% supplemental homestead deduction and mortgage deduction. Assumes no deduction for non-homestead properties. (5) Based on Circuit Breaker tax caps of 1% for residential properties; 2% for rental, agricultural, and long-term care properties; and 3% for commercial properties. 28

29 River Forest Community School Corporation Illustrative Taxpayer Impact for Operating Referendum Models Model C: Operating Referendum Tax Rate of $ Hobart Township Gary Corp Hobart Township Lake Station Hobart Township New Chicago Corp (Hobart) Hobart Corp Hobart Township Illustrative Incremental Impact over Current Operating Referendum Tax Rate of $0.4200: $ Effective Tax Rate (2) $ $ $ $ $ Market Value of Property Net Assessed Value Illustrative Annual Change in Tax Bill $75,500 (3) $16,825 (4) (5) $ $8.00 $45.00 $ $ Illustrative Monthly Change in Tax Bill $10.75 $0.67 $3.75 $10.75 $10.83 Illustrative Annual Change in Tax Bill Non-Residential Property Rental, Agricultural, Long-term Care (5) $100,000 $90.00 $51.00 $51.00 $51.00 $51.00 Commercial Property (5) $100,000 $ $51.00 $51.00 $62.00 $51.00 (1) Based on the 2019 Certified Net Assessed Value of $164,137,456, for the existing Operating Referendum as provided by the Department of Local Government Finance and assumes no growth. (2) The 2020 effective tax rate is calculated by increasing the 2019 certified tax rate by the incremental impact of the proposed operating referendum tax rate. (3) Median home value within the School Corporation, per the U.S. Census Bureau American Community Survey. (4) Assumes homestead deduction, 35% supplemental homestead deduction and mortgage deduction. Assumes no deduction for non-homestead properties. (5) Based on Circuit Breaker tax caps of 1% for residential properties; 2% for rental, agricultural, and long-term care properties; and 3% for commercial properties. 29

30 NEXT STEPS 1. Board to Take Consideration What to Do January 28, Considerations 3. Cut $627,000 from Operations ( possible transportation reduction) 4. Adopt resolution for Operating Referendum to continue tax rate for Transportation and Capital 5. Approve the 3 year advance notice resolution requiring notice to the Department of Education of the termination of Transportation due to tax cap credit loss, except for transportation as required by law JUST REMEMBER THE STORY ISN T OVER!